Analysis of LDirect Co's Business Information Systems (MASB1043, 2019)

This case study examines LDirect Co, a company founded by Tom Hardy, which initially supplied Laser-disk records and expanded to include CDs and audiotapes. The analysis explores the application of information technology to manage business threats using Porter's five forces, including the threat of new entrants, bargaining power of buyers and suppliers, the threat of substitutes, and industry rivalry. The study further investigates the relationship between information system strategies and business strategies, emphasizing the importance of aligning both for effective management and growth. The analysis highlights the impact of IT on business strategy, the shift in the relationship between business and IT strategies, and the importance of adapting to market changes. The study concludes by emphasizing the significance of aligning business and information system strategies for achieving a competitive advantage and meeting customer needs. The case study also discusses how the company can leverage IT for improved operational efficiencies and strategic transformation.

Running Head: Information 0
LDIRECT co
Business Information Systems
3/17/2019

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Introduction
LDirect Company initiated by Tom Hardy, which supplied Laser-disk records and audio
selections to people within the local area. He successfully utilizes the developed website to
promote his business to an international level. In the prospective five years, their business
seeks a steady development as various new clients were generated. He diversified his services
and started to supply compact disks and audiotapes with the help of the website. As he hired
10 people to assist with the expansion of business, invested capital in information technology,
developed a customer database and establishes links with supplier and distributors
(Krichevsky and Johnson, 2015). In the following, an effort has been made to discuss the
significance of Information technology, which can be used to manage the threat utilizing five
forces analysis. In addition, describe the relationship among the information system &
business strategies, and align both the strategies in an effective manner.
Information Technology can be used to manage the threats using Porter’s five forces
LDirect seeks to recognize that they face increased threats from many other organizations
who were delivering online purchasing facilities and dealing with the challenges of illegal
pirating, which is rapidly developing in the industry (Pearlson, Saunders and Galletta, 2016).
Porter’s five forces analysis
(Palacios-Marqués, Soto-Acosta and Merigó, 2015)

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 The threat of new entrant- It is stated that LDirect is facing the threat of new
competitors, which are equipped with value propositions and new digital-based
methods. Information technology can be used to manage threats by developing new
business models and establish a diversified platform for digital business. They can
utilize cloud technologies, cyber-security, intelligent automation, mobile & social
media analytics, and the Internet of Things to improve the value proposition in the
future. This IT industry is significant because of its customer base and rapid
development.
 Bargaining power of buyers- LDirect biggest driver of digital business emerges
from the needs and preferences of customers. They are facing the threat of fulfilling
the customer requirements and attain the economies of scale at the minimum time.
They need to maintain its position as a customer can easily switch so bargaining
power of buyer is high so they also need to modify their website and provide unique
service to people who are requesting video and audio recording. Information
technology can be utilized to manage threats by continuous corporate innovation
across business processes, products, models, operations, and services (Marin et al.,
2015).
 Bargaining power of suppliers- Suppliers can slow down or quicken the adoption of
digital-based business models, which influence the LDirect. Information technology
can be used to manage the threats, which are identified as LDirect are not maintaining
electronic links with suppliers and maintaining a customer database. They are
receiving supplies from various music distributors but then also it cannot achieve the
economies of scale. It can be managed by utilizing the Application Programming
Interface to integrate their capability to form a new collaboration. It is stated that they
need to use their bargaining power to decrease the validity of integrated models where
the supplier can use the models to embrace the customer experience.
 The threat of substitutes- In respect of the digital business, the threat of substitutes
might replace LDirect offerings, which are differentiated from other product. It is
stated that they are currently supplying DVDs, LD records, CDs and audiotapes in
which there are many substitutes available in the music industry. Therefore, the
customer can switch to another substitute and generate an effect on the profitability
and market share of the industry. Information technology can be used to manage the
threat as they can develop a long-term revenue stream from the digital services than
the one time sale of the product. The threat of substitutes is high in the music industry

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as many suppliers are available for delivering through online recording (Bondarenko
et al., 2017).
 Industry Rivalry- It is stated that existing competitors are seeking for digital
business. This rivalry among competitors of LDirect has added fuel to fire as it is
increasing because of entry and exit barriers which are slowing down because of the
low cost of business models and they need to integrate a set of services to improve
their customer experience. Information technology will assist in developing
competitive advantage and manage key processes in aligning the strategies. They need
to negotiate the sale of return with all the substitutes and ensure that recording which
is provided to its customer is free from piracy (Toro-Jarrín, Ponce-Jaramillo and
Güemes-Castorena, 2016).
The relationship between Information system strategies and business strategies
It is stated that earlier LDirect communicate to their customers based upon receipt of order
and does not utilize its information of customers to encourage sale and customer purchasing
habits. This is the weakness in the strategy of LDirect, which leads to slower down in the
expansion and diversification of the industry. They are offering unique and attractive services
to people so that they can align both the strategies in an effective manner. To fulfill such
queries is very time consuming and costly, which requires competence and expert knowledge
(Wu, Straub and Liang, 2015).
Business strategy adequately remains the same to analyze the market and delivering effective
marketing strategies and services to customers, which assist them to attain the strategic goals
and objectives. Information technology assists organization in their strategy in analyzing the
new market to deliver the DVDs, CDs, and audio recordings in effective price without piracy.
It also assists in establishing new products and services so that productivity can be generated
and enhance value chain in managing the threat of the LDirect. This growth and development
enable LDirect to rethink upon the information system strategies, which generates new value
for old as well as prospective customers with economies of scale and achievement of forces.
This is the reason for the transformation of the relationship between business strategies and
information system strategies, as they need to utilize customer information to achieve the
success and growth in the future. It is to be suggested by Kevin that they should hire tele-
employees to manage with this side of the business (Nan and Tanriverdi, 2017).

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It carries value to new markets and generates different services for existing markets. It is
stated that with that competition increased, they need to rethink to make their Information
technology even stronger. Information technology allows cooperating towards slowing down
the cost, just-in-time delivery, and empowers them to identify different ways to add value to
the clients. The relationship between both the strategies has been changed because of
automated checkouts, which are recently been held as similar to just in time and inventory
management processes. Similar technology will replace the scanner and tracks the record of
customers who are purchasing online DVDs. Another change, which has been identified as
LDirect, need to deliver online ordered products with a possibility at home or store close to
home. It can be regarded as a huge transformation in the IT landscape in which the overall
process can be automated to the physical delivery of the products. This needs a
transformation in Information technology as well as business strategy. It is quite evident that
it has not changed for the most part, as IT manages to be as a supporting function for most of
the organization involving LDirect, the exception are those that digitally deliver the products
and services (Altamony et al., 2016).
The significance of IT has been increased largely as the integration of automation,
outsourcing, virtual work, and shared services, which has transformed the internal dynamics
of several companies involving LDirect. However, the relationship of corporate to IT strategy
has not changed much. They should constantly enhance the LDirect website and manage both
the strategies. It is not easy to provide and diversify our services in the international market
and to adapt to such change might incorporate to rethink upon business strategy. Business
strategy should exploit information system strategy to make it profitable and successful. It
would also assist in recognizing opportunities for information systems to maintain a
competitive advantage. They should effectively align both the strategies, which can provide
an international service and utilize information of the customers efficiently (Akter et al.,
2016).
LDirect align both the strategies
Alignment between the business and the information systems is quite a unique combination
which is present is the key driver in taking the organization to the next level. The information
systems not only ease downs the working of the business but also helps in enhancing the
production of the business. In the case of the LDirect, the computing facilities within the
LDirect are following the trends even if the size of the company is a bit small. There are

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facilities, which are not subjected to such small innovation rather each department is
equipped with the latest personal computers with the support of the client-server based
technology of modern nature. The relational database management system and the standard
office systems are installed on each computer for providing accuracy in the information
gathered by the manager. The best thing about this system is its readiness, which means when
the information is required by the department the information is available without any hassle.
The system does provide the access but they are subjected to the rights of the users (Luftman,
Lyytinen and Zvi, 2017).
As per the case study in the view of Tom, he is continually developing the website to make
sure it benefits and pursue this as one of the business strategies. The company because of the
few key elements that will benefit the company introduces all these steps and few of the
examples are faster time to market, increasing profitability, to provide the sound and the
smooth customer experience and improved collaboration. The greater the industry more will
be the IT agility. The importance of the synergy can make the company more profitable and
see the return on investment because they are required to hit the goals with fewer efforts.
While there may be no standard way to align so that the organization like LDirect will
improve the operational efficiencies (Cui et al., 2015).
This overall will create the strategic technological transformation and the continuous
improvement in the strategic systems will help the firm to provide better opportunities to the
customer. Since the information technology sector is the one, which is growing rapidly,
therefore it is advised to the company to be in alignment with the information systems, as it
will attract more customers to buy the DVDs and CDs online. This will not only save time
and energy but will create the facilities of ease for the niche (Rosemann and vom Brocke,
2015). Though the magazines are also introduced from the point of the view of delivering the
regular updates about the products to the customers yet the information systems will help the
customers to get the access of the news right on the website which will save the time, energy
and cost of the customers as well. Hence, it can be concluded that there shall be a proper
alignment of the business strategies and the information systems to cater to the needs and the
preferences without having to expand the lots of dollars. LDirect is an example of the
creation of internal technology and the business strategies themselves (Tarhini, Al-Dmour
and Obeidat, 2015).

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Conclusion
LDirect is an organization, which is set up Tom Hardy and distributes DVDs, Laser disk
records, and audio as well as video recording to people within the local area. He expands his
business and seeks to find a steady growth in the prospective four years. In conclusion, it has
been stated that LDirect has to deal with increased threats from other organizations and
Information technology plays a great significance in mitigating the threats. In addition, the
relationship among the business as well as information system strategy has been discussed
above.

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